A bottle of bubbly and a beach.
Brett Holzhauer, a 32-year-old personal finance writer, remembers well the day that he paid off the last of his $105,000 debt. He was with his girlfriend and sitting on the sand at Dania Beach, Florida.
He made his final payment of $1,752 on his phone, then cracked open a bottle of Andre sparkling wine to celebrate. His eight-year debt payoff had finally come to an end.
Some $80,000 of Holzhauer’s debt was private student loans, putting him among the 17.8 per cent of borrowers with $40,000-$100,000 in student loans, according to EducationData.org. It takes the average borrower around 20 years to pay off those loans, meaning Holzhauer hit the goal around 12 years faster than normal, EducationData.org pointed out.
Holzhauer, who started his debt payoff journey in 2015 at 22 years old, shared with The Independent how he did it - and why a budget was everything. The interview below has been condensed and lightly edited for clarity.
‘This is not the life for me’
I owed $80,000 in student loans and around $25,000 split between a loan for a new car and credit cards with a 0% interest rate. I owed so much, I legitimately thought about leaving the country permanently. I started mapping it out and really started contemplating it.
In terms of emotions, it was overwhelming. I was stressed out, had anxiety and was literally losing sleep over it, feeling like, “I’ll never have this debt paid off.”
I was lying in bed one night at 22 years old in Salt Lake City. It was freezing cold outside. I didn’t turn on my heater because I couldn’t afford to. I would’ve felt guilty turning it on.
At that moment, I said, “I will not live like this. Come hell or high water, this is not the life for me. By 30, I’ll have my debt paid off.”
I didn't want to live with that burden forever.
Budgeting was a critical part of moving forward but I also worked really hard to find freelancing jobs I could do on the side that went directly to my debt. I made around $1,000 to $2,000 in a typical month, freelancing personal finance and travel articles.
Attack from all angles
The first step I took was sort of an audit of every single expense I had each month. I sat down and wrote all the numbers on paper.
I just took an average cash pile of how much we're bringing in every month, how much we need to survive, and on top of that, added a little bit of extra cash for us - I was married at the time - to do things we enjoyed.
At the time, our expenses were around $3,500, and our income was around $6,000 or $7,000 a month. We took all the extra money we had each month and just attacked the debt from all angles.
I know some budgets can be really extreme and put people on that proverbial rice-and-beans diet so they can put as much of their money toward debt as they can, but that approach just wasn’t for me. I still wanted to enjoy my life while paying off debt, so I made sure our budget included money for things that make us happy - around $250 to $500 that we used for things like travel.
As far as which app or platform people should use to budget, do what makes sense to you. The best thing anyone can do is figure out a system that works for them, whether it’s physically writing down the numbers or using an app, spreadsheet or ChatGPT.
The power of “no”
Budgeting is essential, whether someone makes 10 grand or a million dollars a year, but it won’t be effective if they don’t learn how to say “no” to impulse purchases and things they don’t need.
That’s the biggest lesson when it comes to budgeting and personal finance. We don’t need the newest car, shoes or iPhone. Saying no to things that you don’t need can be the biggest wins in the budget.
Danger zones
Decide which types of spending you want to cut back on or eliminate. For me, it was two main things: weeknight dining and clothing.
I love spending money on eating out but on a Wednesday or Thursday night, there was no reason I couldn’t just stay at home and cook. If I wanted to go out on Saturday night, I did and enjoyed myself; people still need to have fun when they’re on a tight budget and paying off debt.
For clothing, I basically didn’t buy new clothes because they didn’t really matter to me. I used clothes until they almost unwearable, then would shop thrift and second-hand stores to buy a replacement.
Everyone has their own thing they enjoy spending their money on, so it’s important you know what that is.
I also tried to be a really mindful shopper at the grocery store; that can be extremely helpful. For example, I cut out junk food and drinks I didn’t needed, like alcohol and soda. I also shopped only at lower-end grocery stores.
And subscriptions are a huge thing; we’ve got to get out of their trap. Subscriptions typically aren’t that expensive, but we have so many of them that it’s like a death by a thousand cuts.
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